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Mr. Forth: I am sure that that is a relief to every other constituency in the country. We shall leave that judgment to the people of Carlisle in the election, which is or is not about to happen. No one seems to know because the Prime Minister cannot make up his mind.
The Bill may seem innocuous at first glance, but it provides for a wide-ranging and costly inquiry that I do not think would be very fruitful. We already have mechanisms, such as rail users consultative and representative bodies, the Rail Regulator, company law, which provides a framework within which the railway operators work, and the Health and Safety Executive. Whether such an inquiry would bring any improvement at all remains to be seen.
Although the hon. Member for Carlisle was a little too coy to say so, I am sure that he is really after the return of British Rail. If that is so, it is incumbent on the Minister to be open about how the Government see that idea and about where it might lead us. I have already quoted the Labour party manifesto from the last election, which said:
I have, I hope, raised a few pertinent questions and given the Minister some material to get his teeth into. I look forward to hearing what he will say so that the House of Commons may judge whether the Bill deserves our support.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Robert Ainsworth): This has been an interesting debate. My hon. Friend the Member for Carlisle (Mr. Martlew) spoke with obvious conviction, and I thank him and the right hon. Member for Bromley and Chislehurst (Mr. Forth) for their contributions. I recognise the concerns so clearly articulated in the debate, but the Government cannot support the Bill. I will clarify why that is so. Some, though not all, of the reasons for our response became apparent during the debate.
Since Hatfield, several options for restructuring the management and operation of the national rail network have been put forward, particularly in relation to the future ownership of Railtrack. I shall deal with each of them in turn. The Government have made it clear that we have no plans to bring Railtrack back into public ownership. To do so would probably take a couple of years and involve complex and controversial primary legislation. During that time, the industry would effectively be paralysed.
Bringing Railtrack back into public ownership would cost the taxpayer around £4 billion at the current stock market valuation--I appreciate that the stock market is a movable feast at present, but that is the approximate price. None of that would be spent on rail investment, since it would all go towards compensating shareholders.
After years of instability caused by the break up of the railway system into more than 100 separate companies, the Government do not wish the industry to undergo further years of upheaval. That would be in no one's interest. It would divert valuable public resources that would be better spent on direct investment in improvements and expansion. We believe that over-hasty privatisation left the system with real problems, but our task remains to deal with the railways as we found them and to make sure that they operate in the public interest.
The Government's present stance reflects the decision taken at the last Labour party conference. Acquisition by the Government of a minority shareholding in Railtrack would not give us control over the company's policy. Under company law, stakeholders have a fiduciary duty to put the interests of the company first, not their own.
The Government would not be able, for example, to use a 25 per cent. stake in Railtrack to force decisions in line with Government policy. As a minority shareholder, we would not have control of the company or its policy. We would therefore have responsibility without power. Rather than increasing control over Railtrack, an equity stake in the company could result in the Government seeming to be complicit in all Railtrack decisions--including those taken in the interests of the majority of shareholders, which may be at odds with public policy. It is better management and planning which will deliver improved performance for the company.
Support has been articulated today for converting Railtrack into a public non-profit stakeholder trust. Under this option, the company would be run by a Government-appointed stakeholder board of train operators, the Strategic Rail Authority, customers, employees and so on, with no single party exercising majority control.
However, a public trust would almost certainly be subject to public expenditure controls. It would not guarantee the necessary investment without having to find it from public resources, which we believe would be better invested in education and health, for which no alternative sources are available.
The requirement on the Government to underwrite the bond issue to purchase Railtrack from the current shareholders would impose a further potential burden on public expenditure. Buying out shareholders would divert funds earmarked for investment. The costs of non-commercial projects, cost overruns and poor performance would fall to the taxpayer, rather than to operators and customers. The inability to offer a return to investors would reduce Railtrack's current access to private investment capital.
It is far from clear that the proposed composition of the stakeholder board, in which none of the partners has a majority, would facilitate policy agreement or decision making, or that the engineering and asset management skills fundamental to improving safety and raising train performance would predominate.
There is a role for stakeholder input, but this is at the strategic level when plans are being drawn up by the Government and the Strategic Rail Authority. The role of the Railtrack board is to deliver the infrastructure element of these plans, not to decide what they are.
Splitting Railtrack geographically would produce further fragmentation at a time when it is generally accepted by the industry that the overriding need is to achieve coherence. It would further reduce the company's ability to raise capital for investment.
The concept of vertical integration--to enable franchises to include operational responsibility for track--has also found recent support. However, this would reduce the autonomy of franchisees and undermine the current and proposed franchises. It would complicate the role of the Rail Regulator and might result in the promotion of regional interests ahead of the delivery of a national strategy for a renaissance of our railways. It is not clear how vertical integration of passenger franchises would help cross-franchise operators such as freight.
I share the conviction of my hon. Friend the Member for Carlisle that mistakes were made in the privatisation process. Indeed, since Hatfield the architects of that process have admitted that they got it wrong. The right hon. Member for Bromley and Chislehurst came pretty close to admitting it today. But after years of fragmentation and instability, the answer is not yet more upheaval. What we now need is evolution rather than revolution.
The Government believe that the major changes proposed today to Railtrack's ownership, operation and accountability are not necessary to ensure that the company meets its public service obligations. We have appointed a tough Rail Regulator to ensure that Railtrack delivers on its licence requirements and does not abuse its monopoly position.
We are not keen to implement options that entail reorganisation, upheaval and the loss of management focus and strategic direction, or increase the Government's costs as a result of compliance with market rules governing share acquisitions--knowledge of our intention to acquire Railtrack stock would drive up the company's share price. Instead, the Government have decided that the time is better spent putting in place the new coherent industry arrangements contained in the Transport Act 2000 and that the money is better spent as part of the £60 billion provided for in our 10-year plan for transport, published last July.
The Prime Minister made it clear last month that the only way to cure the problems on the railway is through proper strategic control and urgently needed investment. We have created the Strategic Rail Authority to tackle fragmentation and to provide strategic leadership. We are working hard to correct decades of underinvestment through our 10-year plan.
The Government's interest is to ensure that Railtrack implements the national track recovery plan as it has promised, following the disruption from gauge corner cracking, and that it invests in a safer, punctual and efficient railway, backed by the massive investment programme in the 10-year plan.
The issues proposed for review by my hon. Friend the Member for Carlisle have already been covered by a recently undertaken parliamentary inquiry--that of the Select Committee on the Environment, Transport and Regional Affairs into rail investment--to which my noble Friend the Minister for Transport gave oral evidence on